BLOG:  Digital Financial Reporting

This is a blog for information relating to digital financial reporting.  This is my brain storming platform.  This is where I think out loud (i.e. publicly) about digital financial reporting. It is for innovators and early adopters who are ushering in a new era of accounting, reporting, auditing, and analysis in a digital environment.

Much of the information contained in this blog is synthasized, summarized, condensed, better organized and articulated in my book XBRL for Dummies and in the chapters of Intelligent XBRL-based Digital Financial Reporting. If you have any questions, feel free to contact me.

Whatever Happened to the Semantic Web: Overcoming Poor Quality

Metacrap is a derogatory term for metadata.  In his 2001 influential essay Metacrap: Putting the torch to seven straw-men of the meta-utopia, Cory Doctorow, a blogger and digital rights activist, pointed out a world of "exhaustive, reliable" metadata would be wonderful, but such a world was "a pipe-dream, founded on self-delusion, nerd hubris, and hysterically inflated market opportunities."

The utopia of the semantic web has not yet materialized.  Whatever Happened to the Semantic Web? 

So, what is the problem?  First, just as I mention in Computer Empathy that there are TWO categories of artificial intelligence, "generalized" and "specialized" (see page 21/22); there are likewise TWO categories of semantic web; "generalized" and "specialized".  Yes, same deal.

Having a generalized semantic web where everything universally works with everything else will not happen for many years, if it happens at all.

However, a specialized semantic web, say for financial reporting, is significantly easier to create. 

The biggest problem in creating a semantic web is overcoming the "metacrap".  Cory Doctrow offers this list of obstacles to realizing utopia:

  1. People lie.
  2. People are lazy.
  3. People are stupid.
  4. Mission: Impossible - know thyself. (i.e. people are lousy observers of their own behavior)
  5. Schema aren't neutral.
  6. Metrics influence results.
  7. There's more than one way to describe something.

So, what if you could overcome these obstacles?  Not overcome it generally, but in a specialize system such as financial reporting?

If you want to see that happened, be sure to stay tuned.

There seems to be a debate over the use of XML or JSON.  The debate is misguided in my view.  Read Stop Comparing JSON and XML. This article, The Rise and Rise of JSON helps you understand why developers like JSON.  Software engineers can worry about syntax; use whatever syntax you might desire.  It is trivial to convert the XBRL syntax to JSON.  What is hard is figuring out the semanticsOpenGraph, JSON-LD; it does not matter to me.  All of this level will be hidden from business professionals.

Using XML for Data; Why the RDF Model is Different than XML Model;

Posted on Tuesday, December 4, 2018 at 07:17AM by Registered CommenterCharlie in | CommentsPost a Comment | EmailEmail | PrintPrint

Working Proof of Concept Template Selector

I showed a prototype/mockup application GUI interface in a blog post and in another blog post and I showed the metadata that would make that application work.

In this blog post I will show you a WORKING software application and give you the source code to that application so you can SEE how it works.

To get the application to run you MUST be able to run Microsoft.Net (i.e. Windows, this will not work on a Mac).

If you cannot get the application to run, the next best thing is to watch this video which shows what this working proof of concept does.

So what if this ideas of using templates and exemplars for creating financial reports is a good one and actually works out?  What does that mean?

Think about that.

NOTE that there is some sort of memory issue that I cannot figure out that causes the US GAAP topics and disclosures to crash.  To work around that, either (a) use the US GAAP reporting scheme first or (b) if you get the bug close the application, then reopen it and do US GAAP first.


Posted on Saturday, December 1, 2018 at 04:55PM by Registered CommenterCharlie in | CommentsPost a Comment | EmailEmail | PrintPrint

Recognizing that Magic is Not Involved in Getting Computers to Perform Work

In a prior post, I pointed out the benefits of the notion of a "disclosure".  I showed the diagram you see below. 

I have expanded that diagram to include actual links to machine-readable metadata and in a separate diagram links to human-readable information that helps you better understand what the diagram is getting at better.

As you learned from reading the document Computer Empathy, computers don't work by magic.  What seems to be magic is actually the result of attention to detail, good engineering, a good understanding of a domain of knowledge, and machine-readable metadata. 

(Click image to navigate to machine-readable details)

(Be sure not to miss the human-readable information. It will give you a sense of what is going on.)

I have been figuring out how to put the puzzle of financial reporting together for several years.  The effort started long before Rene van Egmond and I wrote Financial Report Semantics and Dynamics Theory.

I have gone down some wrong paths that have led to dead ends.  One dead end was OWL and RDF, basically trying to use the W3C semantic web stack.  I found that path too complicated, too low-level, and something that could never be understood by professional accountants.  Don't get me wrong, the W3C semantic web stack can work; but I could not make it work.

Another wrong path was creating what amounted to proprietary information formats.  That works also, but it made things more complicated than they had to be and you lost the leverage offered by XBRL in some areas.

There were a few other dead ends.

But now, I have a very good framework where all machine-readable information is represented using the XBRL global standard.  In my framework there is still one hold out that is represented in RSS.  I could, and do, use an XBRL taxonomy schema to essentially provide a "list of options".  An economic entity would use ONE item from that RSS list.  XBRL does not really have a mechanism for articulating what it is that I want to articulate to the best of my knowledge; but I will check.  For now, the single RSS file has to stay.

And so, now pretty much everything in my framework is global standard XBRL.

I added additional items to that "web" I showed in that first diagram.  Now everything fits togeter.  All the circles are connected but one.  The only unconneced circle is the "Model Structure Rules".  The reason the model structure rules are not connected is because those rules relate to the report level and not the financial reporting level like all the other information.  Model structure relates to the allowed relations between Networks, Tables (hypercubes), Axis (dimensions), Members, Line Items, Concepts (primary items), and Abstracts.

Everything else is financial reporting related.

And while what I am showing in this first diagram relates to US GAAP; the same framework is used for IFRS and for the XASB reportring scheme which I use for testing and prototyping.

Not bad for a CPA.  Fact is, there is no software engineer that understands financial reporting enough to do what I was able to do simply by paying attention to the information technology professionals.  I honestly could not tell you the difference between "syntax" and "semantics" in 2007.  But I fixed that problem by replacing my ignorance with knowledge.

I am now going to refactor the IFRS and XASB reporting scheme profiles to match the US GAAP profile.

Then, let the magic begin.  Next step is to use all this metadata in software and show how XBRL-based digital financial reporting does not (a) have to be hard to use and (b) suffer from quality problems like the XBRL-based financial reports which are submitted to the SEC.

Time to disrupt financial reporting and build a modern finance platform because I am personally sick and tired of using outdated, even barbaric, approaches to creating financial reports.

Who else is with me?  We have a small but growing group.  If you are with me (i.e. you don't want to pave the same old goat path), please find the best information available on this page of my blog.

I still need to explain blocks better, stay tuned...that is next.

Posted on Wednesday, November 28, 2018 at 09:43AM by Registered CommenterCharlie in | CommentsPost a Comment | EmailEmail | PrintPrint

Machine Learning: Business Decision Maker

Amazon Web Services (AWS) is making their AI, machine learning, and deep learning internal training material available publically for free. There are courses for developers and for business professionals.

This is an excellent course path for business professionals:

Machine Learning: Business Decision Maker - Demystify machine learning, artificial intelligence, and deep learning.


Posted on Tuesday, November 27, 2018 at 09:13AM by Registered CommenterCharlie | CommentsPost a Comment | EmailEmail | PrintPrint

Understanding the Power of Naming Disclosures

One of the things that I have done that has gotten a good deal of interest from accountants is the notion of "templates" and "exemplars" which I went over in this blog post.  In particular, this graphic:

(Click image for a larger view)

What accountants don't generally realize is what it takes to make the notion of templates and exemplars to actually work.  Also, they tend to not understand what templates and exemplars are useful for.

I mean, think about that.  What exactly is a "template"?  What is an "exemplar"?  What is the relationship between a "template", an "exemplar", a "fragment" of a report, etc?  What are they useful for?  All of that will be explained in the future.

What I want to point out is the power of giving a disclosure a computer addressable name.  Think about something.  How do you actually get "templates" and "exemplars" to actually work and what does "work" even mean?

What templates and exemplars actually do will become crystal clear when I get the functionality working the way I want it to work within a software application.  Then, there will be no misperceptions about what a template is, what an exemplar is, and the value the notion of "templates" and "exemplars" bring to financial reporting process, techniques, tasks, workflows, and philosophies.

What I want to explain is how I get all this to work.

Here is the big picture if you are interested.  Key to the notion of "templates" and "exemplars" is the notion of the "disclosure".  Take a look at the graphic below (click the image to get a larger view):

(Click image for larger view)

Note the "disclosure" in the center of the graphic and that there is a lot of stuff hanging off of that part of the graphic.  The arrows represent connections between metadata that describe disclosures, templates, exemplars, references, commentary, rules, topics, and the base taxonomy.

This is a prototype of disclosures organized within a hierarchy of topics:

That is a prototype that I created for US GAAP.  I also have prototypes for IFRS and something that I call the XASB reporting scheme that I use for testing and prototyping.

The most important thing to realize here is not about the "templates" or "exemplars" that you see.  The most important idea is to recognize that what I created was a FRAMEWORK.  The framework is tested using US GAAP, IFRS, and XASB reporting scheme.  I don't have the disclosures for any one reporting scheme, US GAAP or IFRS fully complete.  What I have is some really comprehensive prototypes.

There is one other piece that is critical to understand that helps you see that what a software engineer and I are doing will work.  That idea is what I call the "block".  I will explain the block and how all these pieces fit together in future block posts, so stay tuned.

If you are curious or want additional details, please read the document Putting the Expertise into an XBRL-based Knowledge Based System for Creating Financial Reports.

Step-by-step, high-qualty XBRL-based digital financial reporting that works and is approachable by accounting professionals is becoming a reality.

Posted on Monday, November 26, 2018 at 09:57AM by Registered CommenterCharlie in | CommentsPost a Comment | EmailEmail | PrintPrint